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Unifor-GM agreement a stake in heart of company pensions: Walkom

It’s bad news for all workers when the autoworkers cannot protect their defined-benefit company pension plan

A worker checks the paint on a Camaro at the General Motors plant in Oshawa in 2011. Auto worikers have given up on fighting for company pensions and instead focused on fighting for jobs, writes Thomas Walkom. (Frank Gunn / THE CANADIAN PRESS)

Many of the details of the tentative contract signed between General Motors and its union, Unifor, are unknown.

We don’t know much about the new product line scheduled for GM’s Oshawa plant.

We don’t yet know how much work GM has agreed to shift from Mexico to its St. Catharines engine plant.

Nor do we know how much Canada’s federal and provincial governments will be expected to chip in to win this new investment for Ontario.

So far, the only hint has been a cryptic press release from GM noting that it will “be working with government on potential support.”

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What we do know, however, is that this deal, if ratified, will drive one more stake into the heart of company pension plans across Canada.

Canada’s largest private-sector union has acknowledged that it can no longer even pretend to support defined-benefit pension plans.

Its tentative deal with GM would fully eliminate such plans for new hires, replacing them with defined-contribution schemes.

The difference is crucial. A defined-benefit pension allows for some certainty. Those who pay in over their working lives know what they will receive at retirement. They can plan.

By contrast, a defined-contribution plan is a crap shoot. Contributors know what they have to pay in. But what they get out at retirement depends on the behaviour of the stock and money markets. Such plans are, in effect, souped-up RRSPs.

The Big Three automakers have been trying to get rid of defined-benefit plans for years. Companies can profit during good times when such pension funds are in surplus. But in bad times, they are required by law to make up any deficit.

The big North American automakers are doing well these days financially. But they would prefer to avoid even the possibility of having to cover pension deficits in the future.

In 2012, they persuaded the union to let them roll pensions into a two-tiered wage structure. New hires are not only paid less than regular autoworkers, they also receive worse pensions.

Until now, Unifor had managed to hold out for so-called hybrid plans that gave new hires at least some certainty about their retirement pensions. Under the new tentative contract, even this will be gone.

Unifor President Jerry Dias said the pension sacrifice was worth it. “It’s a great deal,” he told CBC Radio on Tuesday.

Dias said his main aim had been to ensure that GM allocates new production to Ontario and that was achieved.

If auto contract talks follow their usual pattern, the GM deal — new production in exchange for pension concessions — will be replicated at Ford and Fiat Chrysler.

Not every unionist agreed with Dias’ single-minded focus on winning new investment.

“The problem with getting new investment through collective bargaining is not that it’s a bad demand — the union can hardly ignore this concern,” wrote former auto union staffers Sam Gindin and Herman Rosenfeld in the online publication The Bullet earlier this month.

“But it may become the only demand, while the company is virtually invited to make concessionary demands.”

Gindin, Rosenfeld and others argued that Unifor should focus instead on ending the two-tier wage and pension structure.

The demise of the company pension plan predates this set of contract talks.

Most workers never had company pension plans in the first place. Those who did usually worked either in large, unionized factory settings or government.

Not all plans suffered. The government-run Canada Pension Plan, which offers defined-benefits to all retirees, has prospered — largely because it is big, comprehensive and adequately funded.

But private pension plans fell by the wayside as union after union agreed under duress to trade them away.

Throughout, the Canadian Autoworkers — or Unifor as the union is now known — was a kind of beacon. It made strategic retreats. But it never entirely gave up.

Now, on the pension front at least, it has.

Not on everything. The new contract would provide jobs, raises and a higher start rate for new hires.

But if even the autoworkers can’t protect their defined-benefit company pension plans, who can?

Thomas Walkom’s column appears on Monday, Wednesday and Friday.

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